At the end of the year, it might make sense to sell some stocks which currently are in the red to compensate gains made by other stocks for tax reasons.
Usually, people only hold stocks if they are confident, that they have the potential to rise in the future, so although some specific stock is in the red at the end of December, at least in some cases they do not want to sell them completely. Thus, they might re-buy the stocks they've sold for tax reasons (and it still is beneficial to them, since order costs are negligible).
Of course, in many cases, one won't be able to re-buy the stocks for the same price as he sold them but sometimes one might buy the stock for exactly the same price as he sold it just a couple of seconds/minutes ago. So far so good. Recently, I've heard that buying and selling stocks at the same price within a short timespan is considered to be market manipulation. Since at least for a private person trading with ~1000-10 000 €/$, I can't imagine how this would manipulate the market (and why it should be forbidden). Thus, I decided that this story must be a fairy-tale.
A couple of weeks ago, a law-professor told us about a client who indeed had some problems with the financial regulator because of buying and selling for the same price. For clarification, I have to admit that he had a buy and a sell order for exactly the same amount of stocks for the same price at the same time.
So, since this seems to me to be a valid source it might be more than a fairy-tale.
1) Can anyone explain to me why this might be considered as market manipulation (according to Wikipedia definition I don't see how this might manipulate the market. If at all it might be close to a "wash-trade" but I still don't see how one can take advantage with just a few thousand €/$), especially because buying and selling at the same price doesn't change the price itself but since orders aren't for free one effectively even loses money?
2) Is it crucial that both orders are active/executed at the same time or is it still manipulation if that happens within a couple of seconds/ one minute?
3) I never tried to get exactly the same price, but if it is forbidden, why is possible to place the corresponding orders without any warning?
4) If that indeed is a "crime", is it a crime everywhere or is this a local juristic peculiarity (Europe)?
Since I don't search for legal advice or the like but I am interested in learning something about this question I don't want to restrict answers to Europe (if the last question turns out to be true).